OUE C-Reit H2 DPU falls 4.2% to S$0.0137

OUE Commercial Real Estate Investment Trust TS0U on Wednesday (Feb 16) posted a distribution per unit of S$0.0137 for the second half of the fiscal year ended December 2021, down 4.2 per cent from DPU of S$0.0143 in the comparable year-ago period.

This propped up the Reit's full year DPU to S$0.0260, 7 per cent higher than DPU of S$0.0243 in FY2020.

The H2 distribution is expected to be paid out on Mar 30, after the book closure date on Feb 24.

Revenue for H2 was down 22.4 per cent to S$116.3 million versus S$150 million in the year-ago period. Net property income for the 6 months was down 20.3 per cent to S$95.2 million from S$119.4 million.

Amount available for distribution for the 6 months was down 11.2 per cent year-on-year to S$64.4 million from S$72.5 million.

For the full FY2021, revenue was down 14.4 per cent to S$249.9 million, while net property income was down 11.9 per cent to S$204.2 million.

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OUE C-Reit said its commercial segment recorded lower revenue and net property income primarily due to the divestment of a 50 per cent stake in OUE Bayfront on Mar 31 last year, which resulted in the performance of the property being equity accounted as share of joint venture results versus being consolidated prior to the divestment.

This was, however, partially mitigated by lower rental rebates and other support measures granted to tenants compared to H2 2020 and FY2020.

As at end-December 2021, the valuation of OUE C-Reit's properties was approximately S$6 billion. The lower valuations for the hospitality and retail segments of the portfolio were mitigated by higher valuations for the Singapore office properties, which saw fair value gains ranging from 0.2 per cent to 7.5 per cent.

The Reit's total debt stood at about S$2.3 billion as at end-December last year. Aggregate leverage was 38.7 per cent, with the weighted average cost of debt at 3.2 per cent per annum.

Approximately 72.4 per cent of the Reit's total debt is on a fixed rate basis, mitigating the potential impact of interest rate fluctuations.

In its outlook statement, the OUE C-Reit's manager said a "stronger rebound" is expected after 2022 when border restrictions are expected to be relaxed more substantially. However, there are still significant uncertainties such as supply chain disruptions, rising business costs due to inflation, and the risk of emergence of new Covid-19 variants which may result in further business disruption.

Han Khim Siew, chief executive of the Reit manager, said: "With the authorities allowing 50 per cent of employees to return to the office from January, we have seen an improvement in office leasing momentum. This bodes well for a continued recovery in Singapore office rents in 2022, which will underpin the performance of OUE C-Reit's high quality Grade A office properties."

Units of OUE C-Reit ended Wednesday at S$0.43 prior to the results announcement, up 1.2 per cent or S$0.005.